Transcription of Finance News Network Interview with Presima Global Real Estate Securities Fund Portfolio Manager, Vincent Felteau
Carolyn Herbert: Hello I’m Carolyn Herbert from the Finance News Network and joining me from global listed real estate manager Presima is Portfolio Manager, Vincent Felteau. Vincent welcome to Sydney.
Vincent Felteau: Thanks for having me.
Carolyn Herbert: Can you start by giving us an introduction to Presima?
Vincent Felteau: Presima is a Montreal boutique investment manager; we focus on listed real estate securities. So we build portfolio, concentrated portfolio of REITs, of usual real estate operating companies across the different markets, global markets. And our approach to this is really having a high concentrated approach. So portfolios of securities would typically be - the number of securities would typically be, between 30 and 40 securities in our portfolio, with higher active share as well.
Carolyn Herbert: For investors who are unfamiliar, why would they consider global REITs as part of a diversified portfolio?
Vincent Felteau: Real estate first of all, provides recurring income and as people are thinking about their future and retirement, they need that recurring income that real estate is providing. The other thing, which is important about our asset class, is that if you think about the demand and supply dynamic, we are in an asset class where supply is relatively limited and it takes time to build real estate, the supply is inelastic.
And on a demand side, if you think about the requirement for an aging population of recurring income, we’ve got large pension funds and insurance companies across the globe, having an increasing need for income. And because interest rates are so low, we believe interest for real estate will continue to grow over time. And this is what we’ve seen in the last few years, an increasing allocation to real assets or alternatives, where real estate is an important component.
Carolyn Herbert: Where do you see opportunities in the global REIT market?
Vincent Felteau: At the moment we see opportunities in many different markets. We see opportunities here in Australia, we’re super confident in the retail space, it’s been a good sector for sometime. And we can continue to believe that this sector will perform well. In Japan we see really good opportunities in certain stocks, particularly in developers at the moment. In the United States, we also see really good opportunities, in listed companies owning high quality real estate trading at valuation, which is much better than people are willing to buy in the direct market. So in the United States and this big market, we see a lot of opportunities at the moment.
So basically to sum it up, in all markets we see good opportunities. And in our approach, which is to have high concentration in what we like, there is always a good opportunity to invest. We have high active share, we deviate significantly from the benchmark and this will help us over time, to generate good performance for our clients.
Carolyn Herbert: Do you see any specific opportunities in the Australian REIT market?
Vincent Felteau: At the moment, we continue to see the Australian REIT market as being really attractive. There’s a lot of demand from foreign investors toward real estate in Australia. It’s a tightly held market at the same time in terms of who owns the good real estate. And at the same time, the listed REITs are providing access, liquid access to those good properties that will generate performance, good performance for the long term. So at the moment, we see retail as being our favourite sector in Australia and we think it will generate good return, for investors over time.
Carolyn Herbert: Finally Vincent, given the mixed outlook for markets. How is the Fund positioned and do you expect that positioning to remain relatively stable, for the rest of the year?
Vincent Felteau: In terms of the positioning of the Fund, a global real estate portfolio like the one that we manage is always diversified in many different markets. So we have some of our big positions in key cities in the United States. We have positions also that give you exposure to offices, in London for instance. Or key positions that will give you an access to high quality shopping malls in Australia. So over time, we feel that having a diversified portfolio in high quality real estate that’s hardly constrained, in the sense that the supply in new construction of those high quality properties, is quite limited in most markets.
And at the same time, we see increasing demand for real estate from large pension funds, insurance companies, as we see population aging over time. So in terms of our positioning, we continue to be in solid companies, have a good management team, good underlying assets, close to transit systems and infrastructure. And also, properties that are environmentally friendly. So we think these features will bode well in terms of return for investors. So the positioning itself will change depending on the pricing, but the exposure that we provide will continue to be diversified across the different markets and across different asset classes.
Carolyn Herbert: Vincent Felteau, thanks for the update.
Vincent Felteau: Thanks it was a pleasure to be here.